While the National Pension Scheme (NPS) is a Contribution Pension Plan, the Atal Pension Yojana (APY) is managed as a Benefit Pension Plan. Both APY and NPS are governed by the Pension Fund Regulatory and Development Authority (PFRDA) for as long as its rules and guidelines apply.
These two schemes are the two pension schemes that most people invest money or to save money at the time of retirement. Conversion of pension is made by offering a lifetime annuity after opening an APY, NPS account.
The minimum guaranteed pension is known only when the account is opened in the Atal Pension Yojana (APY). NPS is different from APY, which is a voluntarily defined cooperative retirement savings scheme.
Growth in NPS is not guaranteed and it is not known exactly how much the pension will go to. The subscription can be invested in equities, debt or a combination of both. NPS is a market-linked pension scheme in which the amount of pension is determined based on the market savings of the amount one saves.
Under the APY, the amount paid by the subscribers is Rs. 60/- per month at the age of 60 years. 1,000, Rs. 2,000, Rs. 4,000, Rs. 5,000 minimum guaranteed pension will be given. The amount of pension to the NPS subscriber is determined based on the fund accumulated on maturity in NPS and the annuity rates available at that time.
The return on APY is about 8%. The guarantee is fixed for the pension subscriber. It also offers the possibility of higher returns if the return rate is more than 8% at maturity. In the case of Maximum Pension `APY`, the amount of fixed pension depends on the amount you save. But it comes with a limited investment, which has a limit on the amount of the pension.
Atal pension yojana eligibility criteria (APY Eligibility)
All eligible citizens (working in the unorganized sector) between the ages of 18-40 years can register as subscribers to the Atal Pension Yojana scheme. Bank account must be valid for this subscription.
Subscribers can subscribe to this pension scheme on a monthly, quarterly and semi-annual basis. Subscribers can also opt out of the scheme voluntarily subject to certain conditions.
The monthly pension will be available to the subscriber after the age of 60. The pension fund will be refunded to the subscriber's nominee after the death of the pensioner after the death of the pensioner's spouse after the death of the pensioner.
Who is eligible for NPS scheme - NPS Eligibility
Anyone between the ages of 18-70 can open an NPS account. Subscribers who have previously closed NPS accounts will be allowed to open a new NPS account under the increased age eligibility rules.
There is no doubt that tax benefits comes along with the amount invested in NPS. Helps senior citizens save tax.
However, the return on NPS is tied to the performance of underlying assets such as equity and debt. The amount of the pension is based on the amount used to purchase the annuity from the life insurance company in NPS.
